The Unacknowledged Contract

A US manufacturing firm had a 20 year relationship with a Japanese company that was their licensee.  For many years, the contract that they had between them specified a minimum royalty that was far lower than the actual targets the Japanese company had been paying them. So when the contract came up for renewal, the American company adjusted the license royalty, in their words, “to better reflect the reality of the relationship.”  After all, written contracts are very important to US companies. However, several weeks had passed since the Japanese company had received the contact and they had not replied.  The Manager wanted my help.  Could I reach out to the Japanese company and see what happened?

Since I already had a relationship with both companies, I called the Vice-President of the Japanese company.  It turns out that the Japanese interpretation of the American company’s action was very different. They asked why it was necessary to change the contract, and wondered if their American partners no longer trusted them.  Also, the change had come as a complete surprise, as the US company had not reached out informally to let the Japanese company know what they were thinking.  I was able to smooth over the issues, but had to educate both clients about unspoken expectations between them.  Luckily, their long relationship was able to be preserved.

Bottom line: Expectations and perceptions are especially tricky across cultures.  Successful professionals don’t ignore these or assume that culturally different people think the same way they do!